<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

                 [X] Quarterly report pursuant to Section 13 or
                     15(d) of the Securities Exchange Act of 1934
                     for the quarterly period ended June 30, 2000

                                       Or

                 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
                     15(d) OF THE SECURITIES Exchange Act of 1934 for
                     the transition period from _____ to _____.

                         Commission File Number: 0-22401

                              BIONX IMPLANTS, INC.
             (Exact name of registrant as specified in its charter)

         Pennsylvania                                              22-3198032
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

                            1777 Sentry Parkway West
                             Gwynedd Hall, Suite 400
                          Blue Bell, Pennsylvania 19422
           (Address of principal executive office, including zip code)

                                  215-643-5000
              (Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                                   Yes X   No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

At July 31, 2000, there were 10,779,713 shares of Common Stock, par value $.0019
per share, outstanding.
<PAGE>   2
                      BIONX IMPLANTS, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                       <C>
Part I.  Financial Information

Item 1.   Consolidated Financial Statements

             Consolidated Balance Sheets at December 31, 1999
                      and June 30, 2000 (Unaudited)                                        3

             Consolidated Statements of Operations for the Three and Six
                      Months Ended June 30, 1999 and 2000 (Unaudited)                      4

             Consolidated Statements of Cash Flows for the Six
                      Months Ended June 30, 1999 and 2000 (Unaudited)                      5

             Notes to Consolidated Financial Statements (Unaudited)                        6

Item 2.       Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                      7

Item 3.       Quantitative and Qualitative Disclosures about Market Risk                  10

Part II.             Other Information

Item 4            Submission of Matters to a Vote of Security Holders
Item 6.       Exhibits and Reports on Form 8-K                                            10

Signatures                                                                                11
</TABLE>
<PAGE>   3
                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       DECEMBER 31, 1999 and JUNE 30, 2000
                      (in thousands, except share amounts)
                                    <TABLE>
<CAPTION>
                                                                                     December 31,    June 30,
                                                                                        1999           2000
<S>                                                                                  <C>             <C>
ASSETS
Current assets:
              Cash and cash equivalents ........................................        3,186          6,926
              Inventory, net (note 2) ..........................................        7,774          7,661
              Trade accounts receivable, net of allowance of
                          $411,772 and $386,774 as of December 31, 1999,
                          and June 30, 2000, respectively ......................        3,540          2,647
              Grants receivable ................................................          137            153
              Related party receivable .........................................          321            202
              Prepaid expenses and other current assets, net of
              allowance of $223,325 ............................................          914            467
              Deferred tax asset ...............................................          798            798
Total current assets ...........................................................       16,669         18,854
Investments ....................................................................           87             87
Plant and equipment, net .......................................................        2,723          2,397
Goodwill and intangibles, net ..................................................        3,942          3,919
Total assets ...................................................................       23,421         25,257

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
              Trade accounts payable ...........................................        2,940          2,484
              Long-term debt, current portion ..................................           --             --
              Current income tax liability .....................................           --             --
              Accrued and other current liabilities ............................        2,173          1,418
Total current liabilities ......................................................        5,113          3,901

Long-term debt .................................................................           33            199
Deferred tax liability .........................................................          281            281

Total Liabilities ..............................................................        5,427          4,381

Stockholders' equity
      Preferred stock, par value $0.001 per share,
           8,000,000 shares authorized, ........................................           --             --
           None issued and outstanding

     Common stock, par value $0.0019 per share, 31,600,000 shares authorized,
          9,172,585 and 10,779,713 shares issued as of
          December 31, 1999 and June 30, 2000, respectively ....................           17             21


     Treasury stock, 20,509 and 26,500 shares ..................................         (162)          (162)
     Additional paid-in capital ................................................       35,892         39,932
     Accumulated deficit .......................................................      (16,729)       (17,890)
     Accumulated other comprehensive income ....................................       (1,025)        (1,025)

Total stockholders' equity .....................................................       17,994         20,876
Total liabilities and stockholders' equity .....................................       23,421         25,257
</TABLE>


    See accompanying notes to the unaudited consolidated financial statements


                                       -3-
<PAGE>   4
                     BIONX IMPLANTS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                           Three Months Ended             Six Months Ended
                                                                 June 30,                    June 30,
                                                           1999           2000           1999           2000
<S>                                                       <C>            <C>           <C>             <C>
Revenues:
Product sales                                              4,907          4,397         10,014          9,368
License and grant revenues                                    90             69            267            174
     Total revenues                                        4,997          4,466         10,281          9,542

Cost of goods sold                                         1,454          1,690          2,802          3,411
Special charge related to Instrument Inventory               929             --            929             --

Gross profit                                               2,614          2,776          6,550          6,131

Selling, general and administrative                        5,049          2,887          8,998          5,817
Research and development                                     522            748          1,272          1,355
Patent & litigation expense                                  706             28          1,093            228
Severance Charges                                            275             --            275             --

Total operating expenses                                   6,552          3,663         11,638          7,400

Operating (loss)                                          (3,938)          (887)        (5,088)        (1,269)

Other income                                                 378            103            663            109

Income (loss) before provision for income taxes           (3,560)          (784)        (4,425)        (1,160)

Provision for income taxes                                    --             --             --             --

Net (loss)                                                (3,560)          (784)        (4,425)        (1,160)

Loss per share:
     Basic                                                    (0)            (0)            (0)            (0)
     Diluted                                                  --             (0)            --             (0)

Shares used in computing loss per share:
     Basic                                                 8,897         10,780          8,897         10,223
     Diluted                                               8,897         10,780          8,897         10,223
</TABLE>


   See accompanying notes to the unaudited consolidated financial statements.


                                       -4-
<PAGE>   5
                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
                                Six Months Ended


<TABLE>
<CAPTION>
                                                                                 June 30,
                                                                              1999        2000
                                                                              ----        ----
<S>                                                                           <C>         <C>
Cash flows from operating activities:

Net income (loss)                                                            -4425       -1160

Adjustments to reconcile net income (loss) to
net cash (used in) provided by
operating activities:
Depreciation and amortization                                                  364         301
Consignment Amortization                                                        --         426

(Increase) decrease in inventory, net                                        -3176        -313
(Increase) decrease in accounts receivable, net                                688         893
(Increase) decrease in grant receivable                                         89         -16
(Increase) decrease in related parties                                        -100         119
(Increase) decrease in prepaid expenses and other current assets              -139         447
(Increase) decrease in deferred tax asset                                     -725           0
Increase (Decrease) in trade accounts payable                                  -50        -457
Increase (Decrease) in current income tax liability                            117          --
Increase (Decrease) in accrued and other current liabilities                   -56        -755

                                                                             -2988        1071

Net cash provided by (used in) operating activities                          -7413         -89


Cash flows from investing activities:
              Purchases of plant and equipment, intangibles                  -1069         -48
              Purchases of computer software and intangibles


Net cash used in investing activities                                        -1069        -380

Cash flows from financing activities:
              (Repayment) / increase of long-term debt                         -56         165
              Rights Offering, net                                              --        3954
              Proceeds from exercise of employee stock options                  --          89
              Purchase of treasury shares                                      -34          --

Net cash (used in) provided by financing activities                            -90        4208

Net (decrease) increase in cash and cash equivalents                         -8572        3740
Cash and cash equivalents at beginning of period                             14213        3186
Cash and cash equivalents at end of period                                    5641        6926

Supplemental disclosure of cash flow information:
Cash paid for interest                                                          --           8
Cash paid for taxes                                                            155           0
</TABLE>



           See accompanying notes to consolidated financial statements


                                       -5-
<PAGE>   6
                      BIONX IMPLANTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.       Basis of Presentation

The accompanying financial statements have been prepared by Bionx Implants, Inc.
(the "Company") and are unaudited. In the opinion of the Company's management,
all adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the Company's consolidated financial position as of June 30,
2000 and the Company's consolidated results of operations and cash flows for the
three and six months ended June 30, 1999 and 2000, have been made. Certain
information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the consolidated
financial statements and notes thereto presented herein pursuant to the rules
and regulations of the SEC. The consolidated financial statements and notes
thereto presented herein should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December 31, 1999
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 filed with the SEC. The results of operations and
the cash flows for the six months ended June 30, 2000 are not necessarily
indicative of the results to be expected for any other interim period or the
entire fiscal year.



2.           Inventory

         Inventory consists of the following components as of December 31, 1999
and June 30, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                        December 31, 1999            June 30, 2000

<S>                                                     <C>                         <C>
Raw materials                                                $  1,121                    $  1,390
Finished goods - Implants                                       2,844                       2,953
Instruments                                                     4,505                       3,822
Instruments on consignment                                      3,100                       2,500
                                                             --------                    --------
                                                               11,570                      10,665
       Less:
             Inventory reserve for obsolete and excess
                  instruments and implants                     (2,701)                     (1,479)
             Accumulated amortization
              - consigned instruments                          (1,095)                     (1,525)
                                                             --------                    --------

                                                             $  7,774                    $  7,661
                                                             ========                    ========
</TABLE>

The Company amortizes the cost of instrumentation inventory consigned to dealers
and distributors.

In the second quarter of 1999, the Company recorded a charge of $929 for excess
implant and instrument inventory due to changes in technology and the
introduction of new and competing instruments. In aggregate, there were Special
Charges of $6.241 million during 1999.

3.       Net Loss Per Share

Basic losses per share are computed using the weighted average number of shares
of common stock outstanding during the period. Diluted losses per share are
computed using the weighted average number of common and dilutive potential
common shares outstanding during the period. Potential common shares consist of
stock options and warrants using the treasury stock method. These options and
warrants have been excluded from the dilutive losses per share calculation as
their effect would be antidilutive at June 30, 1999 and 2000.


                                       6
<PAGE>   7
The following table sets forth the calculation of the total number of shares
used in the computation of net loss per common share for the three and six
months ended June 30, 1999 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,
                                                         1999                  2000
                                                         -----                ------
<S>                                                      <C>                  <C>
Shares used in computing basic                           8,897                10,780
Loss per share

Incremental shares from assumed                             -                      -
Exercise of dilutive options and
Warrants
                                                         -----                ------
Shares used in computing diluted                         8,897                10,780
Loss per share
</TABLE>

<TABLE>
<CAPTION>
                                                          Six Months Ended June 30,
                                                         1999                  2000
                                                         -----                ------
<S>                                                      <C>                  <C>
Shares used in computing basic                           8,897                10,223
Loss per share

Incremental shares from assumed                             -                      -
Exercise of dilutive options and
Warrants
                                                         -----                ------

Shares used in computing diluted
Loss per share                                            8,897               10,223
</TABLE>



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Business

Statements regarding future performance in this Quarterly Report on Form 10-Q
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995 ("Forward looking Statements"). The Company's actual results
could differ materially from those anticipated by such forward-looking
statements as a result of certain factors, including those set forth in Exhibit
99.1 to the Company's Annual Report on Form 10-K for the year ended December 31,
1999.

The Company was founded in 1984 to develop certain resorbable polymers for
orthopedic uses. The Company has incurred substantial operating losses since its
inception and, as of June 30, 2000, had an accumulated deficit of approximately
$17.89 million. Such losses have resulted to a large extent from expenses
associated with the write off and reserve of impaired inventory, the development
and patenting of the Company's Self-Reinforcing technologies and resorbable
implant designs, preclinical and clinical studies, preparation of submissions to
the FDA and foreign regulatory agencies, the development of sales, marketing and
distribution channels, the write-off of acquired in-process research and
development and the development of the Company's manufacturing capabilities.
After recording profitable results for a number of quarters, the Company has
again recorded losses in recent periods, including a loss of approximately $12.5
million in 1999 and $1.2 million for the six months ended June 30, 2000.
Although the Company's revenues grew significantly in the second half of 1996
and during 1997 and 1998, there was no revenue growth during 1999 or during the
first six months of 2000; indeed, revenues for the six months ended June 30,
2000 were $0.7 million less than the comparable period in 1999. No assurance can
be given that revenues will grow in the future or that revenues will exceed
expenses. There can be no assurance that the Company will be able to
successfully commercialize its products or that the Company will be profitable
again.

During the third quarter of 1999, the Company began to implement initiatives and
refocus its business in an attempt to improve its profitability and operations
performance. Four new products were introduced. The loss from operations,
excluding the special inventory charges, increased reserves and litigation
costs; was reduced from $2,028,000 in the second quarter 1999 to $699,000 in the
third quarter and $335,000 in the fourth quarter at December 31, 1999. The
Company's cash and cash equivalents improved from $2.9 million at September 30,
1999 to $3.2 million at December 31, 1999, representing the improvements made in
cash flow management and our continued efforts to achieve a positive cash flow.
During 2000 cash and cash equivalents increased to $6.9 million as related in
the section on Liquidation and Capital Resource.

During the first half of 2000, the Company incurred a loss of $1.2 million.
Excluding special charges related to inventory of $0.9 million during the first
half of 1999, this loss was $2.4 million less than the loss in the first half
of 1999 as the Company made improvements in its operations.

No assurances can be given that the Company's initiatives will result in
profitable operations in the future.

The Company typically sells, consigns or provides free of charge to hospitals
implant grade, stainless steel surgical instruments for use with each of its
Self-Reinforced, resorbable products. For financial statement purposes, revenues
from the sale of instrumentation systems are included within product sales and
costs associated with such systems are included within cost of goods sold. The
Company began expensing instruments during the


                                       7
<PAGE>   8
fourth quarter 1999 as they are placed in hospitals for use by the surgeon. In
the case of consigned product to distributors and dealers, the Company amortizes
the cost of the instrumentation over a three year period as cost of goods sold.

The Company sells its products through managed networks of independent sales
agents, distributors and dealers. In the U.S., the Company handles all invoicing
functions directly and pays commissions to its sales agents or representatives.
Outside the U.S., the Company sells its products directly to distributors and
dealers at discounts that vary by product and by market. Accordingly, the
Company's U.S. sales result in higher gross margins than international sales.

Outside of the orthopedic market, the Company may seek to establish licensing or
distribution agreements with strategic partners to develop certain products and
to market and distribute products that the Company elects not to distribute
through its managed networks of independent sales agents, distributors and
dealers. No assurance can be given that the Company will be able to enter into
license arrangements on satisfactory terms.

The Company has entered into agreements pursuant to which the Company is
obligated to pay royalties based on net sales of certain of the Company's
products, including the Meniscus Arrow. To the extent that sales of the Meniscus
Arrow products and other licensed products increase in future periods; the
Company's license obligations are expected to increase.

The Company invoices more than 85% of its consolidated revenues in US Dollars.
Approximately 70% of the expenses incurred by the Company are denominated in US
Dollars. The remaining portion of revenues and expenses are denominated in
European currencies, predominantly Finnish Markka. The Company seeks to manage
its foreign currency risk for these other currencies through the purchase of
foreign currency options and forward contracts. No assurances can be given that
such hedging techniques will protect the Company from exposure resulting from
relative changes in the economic strength of the foreign currencies applicable
to the Company. Foreign exchange transaction gains and losses can vary
significantly from period to period.

The Company's operating losses have resulted in net operating loss carryforwards
of approximately $8.5 million for Federal, foreign and state income tax
reporting purposes as of June 30, 2000. Because tax laws limit the time during
which these carryforwards may be applied against future taxes, the Company may
not be able to take full advantage of these carryforwards for income tax
purposes. Furthermore, income earned by a foreign subsidiary may not be offset
against operating losses of U.S. entities. The statutory tax rates applicable to
the Company and its foreign subsidiaries vary substantially. Tax rates have
fluctuated in the past and may do so in the future.

The Company's results of operations have fluctuated in the past on an annual and
quarterly basis and may fluctuate significantly from period to period in the
future, depending on many factors, many of which are outside of the Company's
control. Such factors include the timing of government approvals, the medical
community's acceptance of the Company's products, the success of competitive
products, the ability of the Company to enter into strategic alliances with
corporate partners, expenses associated with patent matters, the results of
regulatory inspections and the timing of expenses related to product launches.


Results of Operations

Product sales. The Company's product sales decreased by 11.6% from $4.9 million
during the quarter ended June 30, 1999 to $4.4 million during the quarter ended
June 30, 2000 and by 6.9% from $10.0 million during the six months ended June
30, 1999 to $9.4 million during the six months ended June 30, 2000 .
Consolidated revenues for the Company are comprised of three specific product
categories: Sports Medicine (which includes the Meniscus Arrow), Orthopedic
Trauma and Craniofacial. In order to stimulate sales and introduce innovative
new products to physicians, the Company has added resources in Sports Medicine
sales and formed an Orthopedic Trauma sales and marketing team.

Consolidated sales of Sport Medicine products during the three months ended June
30, 1999 and 2000 were $3.0 million and $2.8 million, respectively, and were
$6.4 million and $6.0 million, respectively, during the six months ended June
30, 1999 and 2000. Sports Medicine products represented 63% and 63% of sales
during the three and six months ended June 30, 2000, respectively, and 65% and
62% of sales during the three and six months ended June 30, 1999, respectively.
During the six months ended June 30, 2000, Meniscus Arrow sales
represented 85% of the Company's Sports Medicine revenues, as compared with 90%
during the six months ended June 30, 1999. The Company has, more recently,
shifted resources to include additional sales and marketing personnel in this
area. The decline in revenues during the three and six month periods ended June
30, 2000 has been attributed to a need for these resources, competitive
pressures on distributors and a reduction in the number of arrows used per
procedure.


Consolidated sales of Orthopedic Trauma products during the three months ended
June 30, 1999 and 2000 were $1.1 million and $0.9 million, respectively, and
were $2.0 million and $2.0 million, respectively, during the six months ended
June 30, 1999 and 2000. The Company attributes these declines to a reduced sales
and marketing focus on these products during the early portion of 2000. The
Company has, more recently, shifted resources to include additional sales and
marketing personnel in this area by forming a dedicated orthopedic trauma team
in the US focused on sales and marketing as well as directing product
development.

Consolidated sales of Craniofacial products during the three months ended June
30, 1999 and 2000 were $0.6 million and $0.2 million, respectively, and were
$1.0 million and $.6 million, respectively, during the six months ended June 30,
1999 and 2000. These decreases were largely due to reduced market coverage, as
the Company shifted its selling efforts to a distributor network. The Company
commenced sales of Craniofacial products in May 1998.

Grant and License revenues. Grant and license revenues during the three and six
months ended June 30, 2000 were $69,000 and $174,000, respectively, as compared
with $90,000 and $267,000 during the three and six months ended June 30, 1999.
This revenue is generated primarily from grants obtained from a Finnish
government research organization which funds certain research and development
projects.

Gross profit. The Company's gross profit improved from $2.6 million during the
three months ended June 30, 1999 to $2.8 million during the three months ended
June 30, 2000. However, gross profit during the second quarter of 1999 was
adversely impacted by a special charge related to


                                       8
<PAGE>   9
instrument inventory. Absent that special charge, gross profit for the second
quarter declined by $ 0.7 million. The Company's gross profit declined from $6.6
million during the six months ended June 30, 1999 to $6.1 million during the six
months ended June 30, 2000. Absent that special charge, the gross profit decline
was $1.3 million. The gross profit margin declined from 72% (excluding the
impact of the special instrument charge) to 63% from the second quarter of 1999
to the second quarter of 2000 and declined from 75% (excluding that charge) to
65% from the six months ended June 30, 1999 to the six months ended June 30,
2000. The Company attributes a significant portion of the gross profit declines
to a dedication of certain management and support personnel to manufacturing
functions and, to a lesser extent, the reclassification of certain items into
cost of goods sold during the current year. The impact of these items was $375
and $722 thousand in the three and six months ended June 30, 2000 respectively.


Selling, general and administrative expenses. Selling, general and
administrative expenses decreased by 43% from $5.0 million during the second
quarter of 1999 to $2.9 million during the second quarter of 2000 and by 35 %
from $9.0 million during the first six months of 1999 to $5.8 million during the
six months ended June 30, 2000. These declines primarily reflect the charges
incurred by the Company during the second quarter of 1999 as part of
management's initiatives to refocus its business and reallocate critical
resources. In addition, as noted above, the Company rededicated certain
personnel from marketing to manufacturing functions during 2000.

Patent and legal / litigation expense. Patent and legal / litigation expense
decreased substantially during 2000; the Company incurred only $28,000 of such
expenses during the second quarter of 2000, as compared with $706,000 during the
second quarter of 1999. The Company believes that the current status of the
proceedings and negotiations does not require the legal assistance that was
previously required when these matters were first initiated.

Research and development. Research and development expenses totaled $748,000 or
17.0% of sales during the second quarter of 2000, up from $522,000 or 10.6% of
sales for the second quarter of 1999 For the first six months of 2000, research
and development expenses totaled $1.4 million or 14.5% of sales, as compared
with $1.3 million or 12.7% of revenues during the six months ended June 30,
1999.


Income taxes. The Company recorded no tax provision for the periods reported
herein, due to operating losses for all such periods.

Net loss. The company recorded a net loss of $1.1 million and $0.7 million for
the six and three month periods ended June 30, 2000 as compared to a loss of
$4.4 million and $3.6 million in the same periods of 1999. Excluding the special
charges related to instrument inventory during the second quarter of 1999, net
income improved by $2.4 million and $1.9 million for the six and three month
periods ended June 30, 2000 as compared to the same periods of 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company has relied primarily upon external (private and public) sources of
equity to fund operations and development.

At December 31, 1999 and June 30, 2000, cash and cash equivalents totaled $3.2
million and $6.9 million, respectively. The increase in cash and cash
equivalents of approximately $3.5 million is primarily attributable to the
Company's Rights Offering of approximately $4.0 million during the first quarter
of 2000. Absent said increase, cash and cash equivalents declined by $0.3
million, primarily as a result of investments in intellectual property.

At December 31, 1999 and June 30, 2000, the Company had net working capital
totaling $11.6 million and $14.9 million, respectively.

The Company's liquidity has been strengthened substantially during the first six
months of 2000. The net increase in cash and investment of $3.7 million during
this period primarily reflects the aforementioned Rights Offering.

         The Company's liquidity is dependent primarily upon its ability to
improve operating results and thereby generate adequate cash flow from
operations. Management has taken several steps designed to improve future
financial results and reduce the amount of cash used by operations, including
(i) developing a management restructuring plan to add critical resources to
areas having the greatest impact in sales growth, (ii) consolidating sales
efforts to improve sales efficiencies, increase market coverage and reduce
selling costs, (iii) refocusing research and development investments on new
product introductions, (iv) consolidating and reducing inventory levels, (v)
increasing sales and marketing efforts outside the U.S., and (vi) where
possible, reducing other operating expenses. However, there can be no assurance
that these steps will be successful. The Company's operations may not provide
sufficient internally generated cash flows to meet the Company's projected
requirements. The Company's ability to continue to finance its operations will
depend on its ability to achieve profitability by improving sales and margins,
its ability to reduce cash outflows and, if necessary, its ability to obtain
other sources of funding sufficient to support the Company's operations. No
assurances can be given that such funding will be available on satisfactory
terms or at all.

         To the extent that funds generated from the Company's operations,
together with its existing capital resources, and the net interest earned
thereon, are insufficient to meet current or planned operating requirements, the
Company will be required to obtain additional funds through equity or debt
financing, strategic alliances with corporate partners and others, or through
other sources. The terms of any further equity financing may be dilutive to
stockholders and the terms of any debt financing may contain restrictive
covenants, which limit the Company's ability to pursue certain courses of
action. The Company does not have any committed sources of additional financing
beyond that described above, and there can be no assurance that additional
funding, if necessary, will be available on acceptable terms, if at all.
Principal stockholders of the Company who previously provided funding to the
Company and provided guarantees to sources of credit have indicated that they do
not intend to continue furnishing such assistance. If adequate funds are not
available, the Company may be required to delay, scale-back or eliminate certain
aspects of its operations or attempt to obtain funds through arrangements with
strategic partners or others that may require the Company to relinquish rights
to certain of its technologies, product candidates, products or potential
markets. If adequate funds are not available, the Company's business, financial
condition and results of operations could be materially and adversely affected.
The Company's future capital requirements and the adequacy of available capital


                                       9
<PAGE>   10
resources will depend on numerous factors, including the Company's ability to
successfully perform management initiatives initiated in 1999, market acceptance
of its existing and future products, the successful commercialization of
products in development, progress in its product development efforts, the
magnitude and scope of such efforts, acquisition opportunities, progress with
preclinical studies, clinical trials and product clearances by the FDA and other
agencies, the cost and timing of the Company's efforts to expand its
manufacturing capabilities, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of strategic
alliances for the marketing of certain of the Company's products. The
sufficiency of the Company's capital reserves with respect to operations beyond
2000 will depend primarily upon the Company's operating results and the extent
to which such results are capable of funding anticipated growth.

         The Company believes that existing capital resources from its $4.0
million discretionary credit line and its $3.9 million rights offering completed
in the first quarter of 2000, together with cash flow from operations (if, and
to the extent, generated), will be sufficient to fund its operations during
2000. This statement constitutes a Forward-Looking Statement. Actual results
could differ materially from the Company's expectations regarding its capital
requirements and its sources of capital. The Company's future capital
requirements and the adequacy of available funds will depend on numerous
factors, including management's ability to reverse recent trends, market
acceptance of the Company's existing and future products, the successful
commercialization of products in development, progress in its product
development efforts, the magnitude and scope of such efforts, progress with
preclinical studies, clinical trials and product clearances by the FDA and other
agencies, the cost and timing of the Company's efforts to expand its
manufacturing capabilities, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of strategic
alliances for the marketing of certain of its products. The Company's operations
did not produce positive cash flows during 1994, 1995, 1996, 1998 or 1999. To
the extent that funds generated from the Company's operations, together with its
existing capital resources (including its credit facility), and the net interest
earned thereon, are insufficient to meet current or planned operating
requirements, the Company will be required to obtain additional funds through
equity or debt financing, strategic alliances with corporate partners and
others, or through other sources. No assurances can be given that such funds
will be made available to the company on acceptable terms or otherwise.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

No change since filing of the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.

Part II. Other Information

Item 6. Exhibits and Reports on form 8-K

             (a) The following exhibits are filed as part of this Quarterly
Report on form 10-Q:

             No. 27.1 Financial Data Schedule

             (b) The Registrant did not file any Current Reports on Form 8-K
during the quarter ended June 30, 2000.



                                       10
<PAGE>   11
                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              BIONX IMPLANTS, INC.

                              By:
                                    ------------------------------------------
                                    Gerard Carlozzi, President
                                    and Chief Executive Officer

                              By:

                                    ------------------------------------------
                                    Drew Karazin, Chief Financial Officer


Dated:  August 14, 2000


                                       11